Situation I On January 1, 2022, Concord Outfitters signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of R$4,960,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2022, to finance the construction cost, Concord borrowed R$4,960,000 payable in 10 annual installments of R$496,000, plus interest at the rate of 10%. During 2022, Concord made deposit and progress payments totaling R$1,860,000 under the contract. The excess borrowed funds were invested in short-term securities, from which Concord realized investment income of R$62,000. What amount should Concord report as capitalized borrowing cost at December 31, 2022? Capitalized borrowing cost R$

Situation I On January 1, 2022, Concord Outfitters signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of R$4,960,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2022, to finance the construction cost, Concord borrowed R$4,960,000 payable in 10 annual installments of R$496,000, plus interest at the rate of 10%. During 2022, Concord made deposit and progress payments totaling R$1,860,000 under the contract. The excess borrowed funds were invested in short-term securities, from which Concord realized investment income of R$62,000. What amount should Concord report as capitalized borrowing cost at December 31, 2022? Capitalized borrowing cost R$

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 5MC

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On January 1, 2022, Flounder Outfitters signed a fixed-price contract to have Builder Associates construct a major piant facility at a cost of R$4,320,000. It was estimated that it would take 3 years to complete the project. Also on January 1. 2022, to finance the construction cost, Flounder borrowed R$4,320,000 payable in 10 annual installments of R$432,000, plus interest at the rate of 10%. During 2022, Flounder made deposit and progress payments totaling R$1.620,000 under the contract. The excess borrowed funds were invested in short-term securities, from which Flounder realized investment income of R$54,000. What amount should Flounder report as capitalized borrowing cost at December 31, 2022? Capitalized borrowing cost R$
asap Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
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